To succeed in business, you must have a clear understanding of your market and your audience. Otherwise you'll pretty much be shooting in the dark with your marketing activity. You probably already know this.
One great way to get to grips with your market is by digging deep under the skin of your competitors; examining who they are, what they're great at, what they're not so great at, and what they have that you don't. A competitor analysis.
A competitor analysis is not just about being nosey. It shows what you're up against and what's expected of you. It gives you the insight to improve your own marketing strategy, whether you're starting from scratch or simply looking to refine your existing approach.
And it helps if you stay ahead of the competition.
The key benefits of a competitive analysis
A thorough competitive analysis gives you insight into three vital pieces of information:
- How your target audience are engaging with your competitors, and the triggers for this. It could be that they have a unique product or service, or perhaps they offer incredible prices. Don't just focus on the positive though. If a competitor isn't doing so well with potential customers, looking at why will guide you away from making the same mistakes.
See also: Identifying your target customer
- Your competitors' strengths and weaknesses. Consider all of the metrics that you measure, and look at how other businesses are performing. This information is going to give your own numbers greater meaning. It might show you something you’ve not thought about.
- Where your own marketing strategy needs to start. Analysing your competition is essential if you want to check your own marketing strategies. Developing an overview of the market will open your eyes to your own strengths and weaknesses, as well as what your product or offering could be lacking.
Armed with this information, you’ll find it so much easier to identify and address competitor shortcomings. It’s truly worth its weight in gold when it comes to business success – as you’ll see.
An effective analysis won't stop at your primary competitors and basic stats. It will really get into the nitty-gritty, looking at brands outside of your market and metrics that really matter. But doing it properly, and being thorough, will guarantee these incredible benefits:
Getting your prices right
While finding price information isn't always that easy (you might have to go through a couple of sales funnels or ring up and pretend to be someone else to get some quotes), it's definitely worth it.
As well as being able to identify any gaps in the market, you'll also have a clearer picture about whether your current positioning is fair in comparison to your competitors.
Let's say your customer map (a matrix that ranks and categorises businesses based on price, quality and customisation) demonstrates that the majority of your competitors are charging premium prices for premium products. You could respond in a couple of ways.
- Go a similar route. You know that your product is just as high quality and customers are willing to pay a premium, and there are other ways you can differentiate your brand.
- Target the underserved gap. There’s less competition offering lower prices, and that gives you a way to undercut the rest.
Understanding how your competitors are positioned in terms of price, and how customers are responding, is an extremely helpful nugget of information when it comes to driving your business forward.
Innovating where it counts
A competitor analysis is ultimately showing you gaps in the market. What is missing or is lacking attention. And this information is the good stuff. The stuff that's going to help you innovate.
You'll also be taking a closer look at what customers are saying about every business in your market. You'll know what they like, what they dislike, and what they want more of.
By giving yourself an overview of exactly what's going on in your market, and similar markets to yours, you're giving yourself an edge.
Marketing tactics that work
A large part of successful strategic planning is a SWOT analysis. This is a tool used to identify the strengths, weaknesses, opportunities and threats of competitors and plays an integral part in revealing essential internal and external influences on your brand's position in the market.
You can really use this tool to analyse anything that is important to your businesses. The most useful for many, are things like brand image and the product or service itself.
Use customer reviews and media coverage to inform your notes and build up an idea of what your competitors are doing right and wrong.
It's these insights that will help you make big decisions in terms of your marketing tactics as you'll be able to see if your brand is resonating as well with customers as others.
Fail to prepare, prepare to fail
While all of the information you gather using your analysis might seem a little overwhelming, it's going to be essential in the success of your business. Companies who skip this step in their strategic planning will pull together a strategy based on nothing but assumptions - a risky approach.
Instead, put your business in a solid position to remove any blind spots and make some noise in your market.